Raise Financial Services, the innovative company behind the investing and trading app Dhan, is making headlines with its latest move towards the unicorn club.
According to sources close to the matter, Raise Financial Services is in the early stages of discussions to raise approximately $100 million. This funding round, if successful, is expected to boost the company’s valuation to a staggering $1.2-1.5 billion, solidifying its status as a unicorn.
The talks, while still in their infancy, have seen investment banking firm Avendus shortlisted to handle the fundraising mandate. Dhan, which was founded by former Paytm Money CEO Pravin Jadhav in January 2021, is poised to take on industry giants such as Zerodha, Groww, and Angel One with this new influx of capital. The fresh funds are earmarked for business expansion and to enhance their competitive edge in the rapidly growing financial services market.
The timing of this fundraising is noteworthy. Indian stock markets have been reaching new heights, buoyed by strong retail participation. However, this surge comes even as government and regulatory bodies express concerns over increased Futures & Options (F&O) activity. Dhan’s ambitious plans include venturing into new financial sectors such as financing, payments, and insurance, as indicated on their website. This diversification strategy is aimed at capturing a larger market share and enhancing their service offerings.
The upcoming funding round is likely to attract both new investors and existing backers of Raise Financial Services. Among the current investors are prominent names such as Beenext, Mirae Asset Venture Investments, 3one4 Capital, and Rocketship.vc. A source familiar with the company’s financials revealed that Raise is currently operating at a revenue run rate of $100 million (approximately Rs 830 crore) with a net profit margin of 40%. These robust financials are expected to support the company’s ambitious valuation goals.
Pravin Jadhav’s leadership has been instrumental in Dhan’s rapid ascent. Prior to founding Dhan, Jadhav was at the helm of Paytm Money, where he played a crucial role in its growth. However, his departure from Paytm Money in March 2020 was marked by disagreements over remuneration and ESOPs. Since then, Jadhav has been vocal on social media, occasionally taking jabs at Paytm Money.
Dhan’s active client base has shown impressive growth, rising from 0.38 million in January to 0.61 million by June, according to data from the National Stock Exchange (NSE). In contrast, Paytm Money’s active client base has seen a decline, from 0.8 million to 0.77 million over the same period.
Dhan operates in the highly competitive discount broking space, which is dominated by players like Groww and Zerodha. Despite the stiff competition, Dhan has achieved a remarkable 330% year-on-year growth in its user base. This growth trajectory is particularly significant as many competitors are experiencing stagnation or decline in user numbers.
To maintain relevance and expand revenue streams, broking apps are diversifying their offerings. Groww has ventured into long-term investments through mutual funds, lending, and UPI payment services. Angel One is developing a fintech super app, while Zerodha has announced its entry into the asset management business. Dhan, too, has been quick to adapt, launching mutual fund investment services to attract long-term investors.